Low Interest Rates: A Double Edged Sword For Seniors

7/17/2008

posted by N. Sioris

Stumble It!

Federal Reserve Chairman, Ben Bernanke testified before Congress this week. Among the topics he addressed were inflation, economic growth and interest rates. He said that for the time being, interest rates would remain where they are. Although he did not signal that further rate cuts are anticipated, he did say that the current low rate environment will probably be with us for the next several months.

Bernanke said that although the weak dollar is driving costs up and inflation is on the rise, the Federal Reserve does not feel that they can raise interest rates at the present time. Bernanke seems to feel that whichever way the Fed chooses to act, inflation is going to continue to rise and consequently tightening of credit is not warranted.

For seniors living on a fixed budget and depending on interest earnings this is bad news. However, for the many senior homeowners that are currently considering a reverse mortgage, low interest rates are a good thing.

Senior homeowners can lock in their expected interest rate on the government insured HECM (Home Equity Conversion Mortgage) at the current low rates. The low rate environment is an advantage because the expected rate is one of the components that determines how much money a homeowner qualifies for. The lower the rate, the more money the borrower can receive from his reverse mortgage loan.

If you would like to see how much money you can qualify for, use our free reverse mortgage calculator. Then request a complimentary reverse mortgage loan quote.